I recently attended a CEO investor forum in New York, and a consistent message, from the investment industry, including CEOs, was: The world has moved from looking at diversity as the 'right thing to do' to 'diversity makes business sense plus it is the right thing to do'. There is evidence to suggest that firms doing better on gender diversity tend to have better returns and performance. Asset owners too are starting to move their investments in firms with a higher diversity score.
Building a diverse workforce in the investment industry, though, is easier said than done. Industry leaders who believe in the business case for diversity also believe that adoption on a wider scale will be slow. The frequent discussion forums, roundtables, and so on, wherein investment industry leaders discuss ways and means to address diversity needs, rarely lead to on-the-ground implementation of diversity initiatives.
So, what can be done to change this? How can investment firms attract a diverse pool of talent, and successfully recruit and retain such diverse talent? Below is a framework, which could support investment firms move from ‘discussing diversity’ to ‘adopting diversity’.
Understand firm motivation for pursuing a diverse and inclusive culture, while being aware that various businesses within the firm might have differing motivations. Define diversity such that it creates a shared understanding. Also, create flexibility to change the definition as the firm evolves and diversity needs change.
Focus on building a culture, rather than creating a policy
If only the C-suite believes in diversity, it’s a policy; if middle managers and the wider employee base also believe, it’s a culture. Middle managers and generally, all people leaders, are key to a successful diversity culture.
Build awareness of biases
(Unconscious) biases about gender, religion, differently abled, ethnicity, physical attributes, and so on need to be acknowledged and addressed, particularly among people leaders. For effectiveness, the message needs to be reiterated on a regular basis, via training and/or discussions.
Encourage open dialogue
Encourage candid discussions about diversity topics, formally or informally. This will help create build a culture of respect and understanding and develop authentic employee engagement. Employees from diverse backgrounds will then feel 'wanted' by the firm.
This is the most important step. Identify diversity metrics and measure impact on a regular basis. If certain diversity initiatives aren’t delivering the desired impact, refine them. If such initiatives are still not delivering, seek support from professional organisations with expertise.
Investment firms can work closely with non-partisan professional organisations, who have demonstrated expertise and developed programmes to support firms to adopt and implement diversity initiatives. One such initiative is the India-first CFA Institute Young Women in Investment initiative, to instill interest in and enable young women from varied educational backgrounds to pursue a career in the investment industry.
While the rich ongoing dialogue on diversity within the investment industry is an encouraging trend, the next step is to action some of the ideas and to measure effectiveness. In a highly competitive investment industry that is competing for returns and talent, firms that adopt and embrace diversity might just have an edge.
The author is director of Institutional Relations for CFA Institute in India.
The thoughts and opinions shared here are of the author.
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